In evaluating the opportunity, investors also had to ask what would happen if Theranos had met its goals? Virtually every screening for a rare event yields more false positives than true positives. Who is able to explain Bayesian statistics to the patients who come out of Walgreen's with a positive result? Or, for that matter, a negative one? Probably not their physicians.
5
There has been a lot of good stuff on business television concerning Theranos.
1) This business is not like digital products for apps. Medical technology is highly regulated.
2) What were George Shultz and Henry Kissinger doing on the board? They know nothing about medicine.
Nonetheless, Silicon Valley is going to take it on the chin because there are scores of Unicorns roaming free. It seems to me that unicorns are the new tulip bulbs. Young people come up with a business model with a patina of credibility made from digital technology. Then venture capital money pours in, and the valuation of the company skyrockets. Sometimes an IPO of stock takes place.
Theranos may be the seed crystal that causes another tech crash.
Also, Elizabeth Holmes may be the poster child of millennials with temerity, and not enough hard-won depth of science knowledge, as well as business acumen. They start billion-dollar businesses like Mickey Rooney and Judy Garland used to say, "Hey, let's put on a show."
Except in the case of Elizabeth Holmes and Silicon Valley, the economy of the United States hangs is in the balance.
1) This business is not like digital products for apps. Medical technology is highly regulated.
2) What were George Shultz and Henry Kissinger doing on the board? They know nothing about medicine.
Nonetheless, Silicon Valley is going to take it on the chin because there are scores of Unicorns roaming free. It seems to me that unicorns are the new tulip bulbs. Young people come up with a business model with a patina of credibility made from digital technology. Then venture capital money pours in, and the valuation of the company skyrockets. Sometimes an IPO of stock takes place.
Theranos may be the seed crystal that causes another tech crash.
Also, Elizabeth Holmes may be the poster child of millennials with temerity, and not enough hard-won depth of science knowledge, as well as business acumen. They start billion-dollar businesses like Mickey Rooney and Judy Garland used to say, "Hey, let's put on a show."
Except in the case of Elizabeth Holmes and Silicon Valley, the economy of the United States hangs is in the balance.
14
Holmes has probably been deceptive in other contexts.
In 2014 she told the New Yorker that she needed to know Mandarin to study at a research institute in Singapore. If you've ever been to Singapore, every educated person speaks English and the city is quite international. The website for the institute is English-only with no Mandarin version.
In 2014 she told the New Yorker that she needed to know Mandarin to study at a research institute in Singapore. If you've ever been to Singapore, every educated person speaks English and the city is quite international. The website for the institute is English-only with no Mandarin version.
34
This is a very interesting article, pointing out that Silicon Valley is not a homogeneous community and providing important details supporting its main argument as to why it is a fallacy to blame Theranos' failings on Silicon Valley. However, one way in which this article misses the boat is to not appreciate how large of a cultural phenomenon Silicon Valley has become, representing both the good and the increasingly recognized bad aspects of the new economy and aspirational attitudes ushered in by Silicon Valley. Isn't the disruption of established systems or fields with new technology to make a financial killing the overall goal of Silicon Valley companies? I believe it is this mentality that has permeated our zeitgeist, and has allowed companies like Theranos to prosper initially. And as the article rightly points out, even if the established Silicon Valley VC firms did not directly contribute to the debacle surrounding Theranos, its successes with other firms helped to create the Silicon Valley mentality, which companies such as Theranos feeds off of.
13
The problem is that Elizabeth Holmes is now a billionaire and neither she nor her company has produced anything of any value to anyone. Furthermore, one can assume that she is not the only one to have made millions and millions of dollars off of this fraudulent and failing enterprise. Further furthermore, I don't think it is being cynical to assume that this kind of overvaluation and premature distribution of wealth is all that rare in today's economy. If anyone is looking for the key to the growing financial divide between the haves and the have nots, this might not be a bad place to start.
29
And yet there was HRC with Chelsea having a mega-donor fund-raising event with Elizabeth Holmes a couple of months ago. This, even months after John Carreyou broke the whole thing with his string of WSJ stories. The Clintons just can't help themselves I guess. Makes you wonder what other dubious rogues they give the imprimatur of legitimacy to via the CGI.
17
Theranos and Holmes are no different than Bernie Madoff and his phony investment firm that touted unrealistic returns in up or down markets.
Each had an element of legitimacy, Theranos actually does do blood testing only they use conventional machines just like their competitors. Bernie actually made some investments on behalf of his customers, but like Theranos the overall claims were completely bogus.
Holmes could have easily shut down all her critics long ago by simply inviting in the press and all to run test on their Edison machines and comparing the results to pre-tested samples. They have never done this and I believe the reason is that the machines either don't exist or they don't do what she claims.
Each had an element of legitimacy, Theranos actually does do blood testing only they use conventional machines just like their competitors. Bernie actually made some investments on behalf of his customers, but like Theranos the overall claims were completely bogus.
Holmes could have easily shut down all her critics long ago by simply inviting in the press and all to run test on their Edison machines and comparing the results to pre-tested samples. They have never done this and I believe the reason is that the machines either don't exist or they don't do what she claims.
24
I don't blame Silicon Valley for Theranos, I blame the media, including you, NY Times. This paper and others pushed the hype about the supposed girl-wonder CEO, but it just never made any sense to me.
I looked at the company's website and leadership team, which included Henry Kissinger on the board, and I quickly concluded that it didn't add up. I have no expertise at all in this field, but it was evident that no one leading the company did, either, despite the fact that there seemed to be some very high-powered connections and investors involved.
I looked at the company's website and leadership team, which included Henry Kissinger on the board, and I quickly concluded that it didn't add up. I have no expertise at all in this field, but it was evident that no one leading the company did, either, despite the fact that there seemed to be some very high-powered connections and investors involved.
33
Companies do not have birth dates! Corporations are not people. Correct the article
18
The college dropout allure is getting old - it works for the software field, because developing many types of software doesn't require skill anywhere close to skills demanded by hard sciences and engineering. Investors duped by this charlatan deserve everything that's coming to them.
33
The board composition is certainly odd for a biotech company, as it would normally be stacked with reputable professors from the field most relevant to the technology. As someone with a PhD in bioengineering from MIT who has been through the startup grind, the first thing I look for when evaluating a potential employer is the "street cred" of the scientific advisory board. In contrast, while a CEO needs to be conversant in the methodology and fluent in the competitive landscape, I don't expect them to be a technical expert, able to conduct experiments themselves. True, Ms. Holmes' name is on a number of the company's patents, but her role for many years now has been purely that of businesswoman. All of the technical work will have been done by the many PhDs that she's hired to transform her general idea into repeatable and reproducible results. This is key: the most important lesson you learn from an advanced degree in medicine or life sciences is that, unlike computer code that should perform identically with each run, biology is notoriously difficult to control and predict. A lack of professional training might have made Ms. Holmes overly optimistic about feasibility or timelines, but I do believe that a gifted person listening to the right experts could nonetheless guide a biotech company to (spectacular) success.
16
Holmes should not be CEO if this company is going to survive. She has gone beyond being bold, to being irrational. If investors have the patience for Theranos to start from scratch, that'll be a miracle. Who even knows what their so-called 'Edison' machine does, what's the technology behind it? No peer-reviewed papers, total secrecy, not the way to run a biotech company
10
To anyone conducting research in the sciences, this was an obvious mistake from the start. There's no way somebody--even if that person is very very bright--can come up with a workable idea that upends all of analytical chemistry when that person has virtually no experience in the field. As someone who mentors PhD students and postdocs, I see this over and over again among younger grad students.....they think they have an easy solution to a problem that has vexed researchers around the world for years. Then they go into lab and things don't go quite as planned....oh, so this will be a lot more difficult than I anticipated.....so that's why nobody has done this. It's part of maturing as a scientist, and it's why there's no substitute for a PhD and postdoc. It's a shame that so many people indulged this scientific fantasy for so long.
27
We all know what the backroom conversations were: "Don't worry about the pesky regulators and their intrusive questions about whether this thing works. We've got Kissinger, Schultz and a bunch of other hoodlums on our board to deal with these issues. Now let's make some CASH!"
10
It is easy to understand where Holmes got a pass on having to prove herself, her dad had Washington connections thus the high profile board which lent some kind of power aura to her. Invest in her company and get in tight with some Republican aristocrats.
Interestingly Hillary Clinton has ties to Holmes. Holmes was to do a fundraiser for Hillary that she would attend but at the last minute it was switched to George Clooney's house. Again, a question of Clinton's conflicts - need the money perhaps look the other way when it comes to the source because heck don't want to insult the powerful. The optics on this one won out and they had to change the venue.
Theranos is a sure example of connections make money. Once the symbiotic relationship is created, then it becomes an obligation to protect it. Watch Holmes escape consequences. Nothing criminal just bad judgement all to be put down to a learning experience for her. She will rise again because connections and money protect each other.
Interestingly Hillary Clinton has ties to Holmes. Holmes was to do a fundraiser for Hillary that she would attend but at the last minute it was switched to George Clooney's house. Again, a question of Clinton's conflicts - need the money perhaps look the other way when it comes to the source because heck don't want to insult the powerful. The optics on this one won out and they had to change the venue.
Theranos is a sure example of connections make money. Once the symbiotic relationship is created, then it becomes an obligation to protect it. Watch Holmes escape consequences. Nothing criminal just bad judgement all to be put down to a learning experience for her. She will rise again because connections and money protect each other.
17
Ms. Holmes is basically a Sarah Palin who can think on her feet. She hoodwinked a group of older powerful white men into giving Theranos money and prominence and they failed to ask the questions they would have asked of a man. It will be interesting to see how this game plays out given the FDA, SEC, CMS etc are circling like vultures around a corpse.
11
I found it passing strange that this lovely and very young and not too well educated woman had a board for her business that was all old white guys who had no background in science, much less biology and medicine. Am I the only one? Were her investors all guys, too? Too funny.
17
Wasn't she profiled on 60 Minutes?
Actually what Theranos was attempting is very straightforward with respect to determining if the technology works or not. The regulatory requirements are no where near those of a medical device let alone an active pharmaceutical ingredient (API). The technology to acheive the results may be very cutting edge but is indeed an engineering problem. The various methods of antibody/ligand binding are well understood as are the spectroscopic and enzymatic assays. The really hard part is getting it to work consistently within defined specifications and with the proper precision and accuracy. This would especially the case if you were attempting to create an new foundational texhnology that has miniaturized the equipment. I'll look forward to a device that can plug into my iPhone and provide a lab on a chip.
Obviously this was the daunting task and it remains to be seen if Theranos has good patents and proof of concept or if it was just hype. Great target nonetheless.
Obviously this was the daunting task and it remains to be seen if Theranos has good patents and proof of concept or if it was just hype. Great target nonetheless.
5
The laughable part of the piece is that the parts of Silicon Valley outside the top 10 VC firms and the companies they invest in are somehow not Silicon Valley. I guess, in his mind, that Silicon Valley is only the winners. The majority of companies and funds there are...something else I guess. Does that make sense to anyone?
All those other firms and entrepreneurs are what make up Silicon Valley, and the top 10 investment firms skim off the top. And even the smart ones make bad decisions all the time.
And someone with the last name of Draper, with that incredible pedigree and access, was somehow an outsider? Seriously?
And about those top ten firms: is Mike Goguen not part of Silicon Valley (look that one up)? Or Tom Perkins (part of Kleiner Perkins) not part of Silicon Valley when he talks about Nazis? That's definitely Silicon Valley, too. Pump and dump is not Silicon Valley? Um, ok.
Silicon Valley loves innovation, but it loves power and investor returns even more. The only thing that Theranos says about Silicon Valley is that people can make bets that don't work out. This is just an especially public one that in hindsight looks dumb.
But stories like this are absolutely part of Silicon Valley.
All those other firms and entrepreneurs are what make up Silicon Valley, and the top 10 investment firms skim off the top. And even the smart ones make bad decisions all the time.
And someone with the last name of Draper, with that incredible pedigree and access, was somehow an outsider? Seriously?
And about those top ten firms: is Mike Goguen not part of Silicon Valley (look that one up)? Or Tom Perkins (part of Kleiner Perkins) not part of Silicon Valley when he talks about Nazis? That's definitely Silicon Valley, too. Pump and dump is not Silicon Valley? Um, ok.
Silicon Valley loves innovation, but it loves power and investor returns even more. The only thing that Theranos says about Silicon Valley is that people can make bets that don't work out. This is just an especially public one that in hindsight looks dumb.
But stories like this are absolutely part of Silicon Valley.
11
The article gives no credit to clinical pathologists and chemists who were the first to spot the troubles. Rather it credits the secret society of top investors! Full credit to Wall street journal for boldly publicizing this scam despite the initial glowing reviews as other media.
Also, having a PhD or even an MD in an unrelated field is no substitute for subject matter (clinical laboratory) experience. The lab director of theranos was a cosmetic dermatologist, not a laboratory professional. You shouldn't do that for the same reason you wouldn't hire a psychiatrist to be medical director of a medical device start up.
Also, having a PhD or even an MD in an unrelated field is no substitute for subject matter (clinical laboratory) experience. The lab director of theranos was a cosmetic dermatologist, not a laboratory professional. You shouldn't do that for the same reason you wouldn't hire a psychiatrist to be medical director of a medical device start up.
27
As others have pointed out, the scam was clear in hindsight but the narrative so compelling as to blind people to the obvious. It's not like the WSJ just got a free pass when they wrote their series of skeptical articles - they were roundly attacked by Theranos and others for practicing yellow journalism. This story does nothing but warm my heart.
10
What an elitist point of view. Those with fancy degrees and peer-reviewed publications are no more likely to succeed than those without them.
And Silicon Valley is a vast hive of trial and error where no one can reliably pick the winners from the losers. Those who say they can are not telling the truth.
Theranos tried and Theranos failed. Nothing wrong with that. That's the way technology evolves. If Elizabeth Holmes committed fraud along the way, she'll have to pay for that.
But I doubt if she did. People lost money, but they knew (or at least should have known) the risks. Without the many losers like Theranos, Silicon Valley would not have any winners either. That's the magic of venture investing.
And Silicon Valley is a vast hive of trial and error where no one can reliably pick the winners from the losers. Those who say they can are not telling the truth.
Theranos tried and Theranos failed. Nothing wrong with that. That's the way technology evolves. If Elizabeth Holmes committed fraud along the way, she'll have to pay for that.
But I doubt if she did. People lost money, but they knew (or at least should have known) the risks. Without the many losers like Theranos, Silicon Valley would not have any winners either. That's the magic of venture investing.
5
Certainly a disheartening, distressing story. On the other hand, what's worse--a startup pitching a flaky idea to venture capitalists, or banks issuing hundreds of thousands of mortgages to people who couldn't possibly pay for them, then aggregating them into "investments"? The term "business ethics" has become an oxymoron.
13
Last October, Elizabeth Holmes was the keynote speaker at the Cleveland Clinic's annual Innovation Conference - an impressive gig, arranged by one of the most impressive healthcare providers in the world. Dressed in Steve Jobs black from her turtleneck on down, she was alluring and engaging. Holmes addressed Theranos's upcoming challenges with confidence that they would be resolved in the company's favor. But if there were any skeptics in the room, I didn't hear them. Like the mainstream media that piled on the hype about this fetching new star in the entrepreneurial firmament, these professional healthcare innovators seemed content to bask in her glow.
36
For those of us in the clinical laboratory profession, Holmes' claims, combined with the absence of data, made no sense. Yet people still put billions of dollars in. I would like to see an article explaining that...
17
Ultimately at fault for Theranos is too much investment money looking for the next big thing. The availability of all this money, the omnipresence of people looking for some place to put this money (either their own or someone else's), and the omnipresence of people looking for some way to attract or lure this money -- all this means that anyone with an idea that is really exciting is surrounded by people promoting ideas that are carefully crafted to look more exciting than they are. The investment money flooding to Silicon Valley should be channeled into boring investments in infrastructure and education, whose returns are relatively safe, knowable, and limited. Bonds and stocks valued for their dividends rather than capital gains should constitute the majority of investment. But that would force most of the financial entrepreneurs to change careers, or make their futures as exciting as those of Canadian bankers -- relatively poorly paid, dull, and not allowed to seek megamillionairedom in ways that crash their country's financial system.
9
On the Theranos website both Chairman/CEO Holmes and President/COO Balwani proudly crow that they are Stanford University dropouts. Gee, I never went to Stanford so I must be really smart.
30
This debacle will make a great Netflix or HBO series. Get on it!
16
If something sounds too good to be true, then it is too good to be true.
4
Unfortunately, it WAS Silicon Valley writ large that brought us this venture. SV-VC's poor track record in identifying and funding tech advances that relate to the physical world is imposing a large opportunity cost on our society.
5
I am curious as to what she gave them to raise her seed of 500k. Business plan? Financials? Efficacy? I am in health tech, with both an MD and an MPH, along with a business partner who is an MBA, and it is very tough to raise a seed round without proof of concept unless previous successfull exits have been on the level of multi million to hundreds of million dollars.
14
A lot of this rationalizing really looks like hindsight bias. If some investors could really predict which startups would be in the top 10% then the others wouldn't exist.
You can't look at the top 10% ex post and argue that everyone they knew what they were doing all along.
You can't look at the top 10% ex post and argue that everyone they knew what they were doing all along.
4
Kudos to the NYTimes for allowing mention of its competitor, the WS Journal, as having been the first to expose this charade of a company, in the process making a bunch of country club Republicans hired for its board look like fools. Maybe there is still such a thing as journalistic integrity, exhibited here by both of the nation's premier newspapers.
Too bad Theranos isn't a public company. Someone could make a killing shorting them. There's no there there.
Too bad Theranos isn't a public company. Someone could make a killing shorting them. There's no there there.
13
Now maybe Walgreens will leave Rite Aid alone. We should be talking about competition here as well as Silicon Valley and it's technological prowess.
1
two comments:
Agree with you re Rite Aid [and independent pharmacies if any even still exist]: support your local sheriff!
Unfortunately, Theranos was a major competitor to the established laboratories, which may in part account for some of the hype[rventilation].
In closing, VCs are often time "traders" and not "investors" being compelled to roll the dice so to speak in search of the ??% that do home runs and readily accepting balance that wash out.
Agree with you re Rite Aid [and independent pharmacies if any even still exist]: support your local sheriff!
Unfortunately, Theranos was a major competitor to the established laboratories, which may in part account for some of the hype[rventilation].
In closing, VCs are often time "traders" and not "investors" being compelled to roll the dice so to speak in search of the ??% that do home runs and readily accepting balance that wash out.
1
Kudos to the SEC for opening up/leading a securities fraud investigation without waiting for the investors to do so.
9
The next to last sentence says, "Theranos might still prove viable."
So is this article just a smear job?
So is this article just a smear job?
3
You really cannot make this stuff up, right?
I am surprised Theranos was not hyping the prospect of testing glucose levels at home with a tuning fork. Who needs a blood ample, however, minute anyway? Just ask the scientist in the room-Ms. "Too Smart to Finish Stanford" Holmes.
I am surprised Theranos was not hyping the prospect of testing glucose levels at home with a tuning fork. Who needs a blood ample, however, minute anyway? Just ask the scientist in the room-Ms. "Too Smart to Finish Stanford" Holmes.
11
'For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled'
- R. P. Feynman, Commission on Challenger Shuttle disaster
- R. P. Feynman, Commission on Challenger Shuttle disaster
17
A shameful, costly example of that hollow ideology, "Fake it 'til you make it".
Note to investors susceptible to appearances but good with colors:
Black Turtleneck = Red Flag
Note to investors susceptible to appearances but good with colors:
Black Turtleneck = Red Flag
18
“It is pretty weird that if you look at her board, there’s not a single person who knows what they’re doing in the business.”
Got bad news for you, America. This statement doesn't just apply to Theranos, it applies to almost all major medical corporations and hospital systems in this country now. It is true that hospitals always keep a couple of doctors and nurses on their boards, but the MBAs at corporate HQ are making pretty much all the decisions. And if you don't know how to practice medicine, which they don't, patient care always takes a back seat to making/saving money. Stay healthy.
Got bad news for you, America. This statement doesn't just apply to Theranos, it applies to almost all major medical corporations and hospital systems in this country now. It is true that hospitals always keep a couple of doctors and nurses on their boards, but the MBAs at corporate HQ are making pretty much all the decisions. And if you don't know how to practice medicine, which they don't, patient care always takes a back seat to making/saving money. Stay healthy.
37
This is where the old saying "selling a pig in a poke" comes into play. The ploy still works, and how. Suckers will never want for pigs nor marketing types for pokes in which to put them.
2
Wow! Finding such an unflattering portrait of Ms. Holmes must have been difficult.
8
Every pathologist knows that fingerstick technology does not correlate well with venous blood analysis but is probably good enough for serial study of a disease process. Every pathologist I know had serious questions about what little was revealed about the technology (fingerstick; high dilutions). But what was offensive was the unsupported hype and packing the board with political operatives in the hope the company could bulldoze its way past regulators, even to the point of fudging ("using its own metholodogy") on quality control. Yes, Ms Holmes you too sometimes have to play by the rules.
13
There's lots of noise about VC's and the press in most of the comments to this article. Nobody seems to have noticed that the author takes a cautious attitude in his last paragraph: "Theranos might still be viable". At least, Theranos recently has brought in a group of very competent and credible experts to assess the technology in question. I think it would be wise to wait for their verdict rather than jump to conclusions.
I have been in the clinical lab testing business myself and had my doubts about Theranos and how an allegedly disruptive technology was positioned to capture a huge market. But now let's wait a little longer before we call wishful thinking on Ms. Holmes' side fraud.
I have been in the clinical lab testing business myself and had my doubts about Theranos and how an allegedly disruptive technology was positioned to capture a huge market. But now let's wait a little longer before we call wishful thinking on Ms. Holmes' side fraud.
7
It is a lot easier to "invent" a website were people exchange useless information than to create a truly new and useful clinical device or procedure.
18
My former partner got it right: he compared VCs in general to shipwreck survivors. Some washed ashore on the rocks, bloodied up and beaten. Some washed ashore on an exclusive resort beach. The latter then proclaimed what great navigators they were.
The same can be said for the entrepreneurs. Having little resources can kill the most dedicated entrepreneurs with really great ideas. Having an excess of resources can also lead to self-deception. A few hit a sweet spot, and for a few of those, hype and luck, not substance, makes them winners. Party on with the resort people.
The same can be said for the entrepreneurs. Having little resources can kill the most dedicated entrepreneurs with really great ideas. Having an excess of resources can also lead to self-deception. A few hit a sweet spot, and for a few of those, hype and luck, not substance, makes them winners. Party on with the resort people.
14
the concepts that were formented by theranos are simply revolutionary. the only problem (as a engineer, a solution in waiting) is execution methodologies.
recall, Jobs wasn't a coder, however he ruled in the visionary concept realm. that's how you move to the next level.
playing it safe is for employees, not visionaries.
Nicolai Tesla always frowned upon the pedantic way in which technical development took place. as far as he was concerned, if you are not willing to get your hands dirty, you ought to sit down and shut up.
recall, Jobs wasn't a coder, however he ruled in the visionary concept realm. that's how you move to the next level.
playing it safe is for employees, not visionaries.
Nicolai Tesla always frowned upon the pedantic way in which technical development took place. as far as he was concerned, if you are not willing to get your hands dirty, you ought to sit down and shut up.
3
Seems this might have been an example of a Jobs without a Wozniak.
6
I am always amazed how many don't even ask the most basic questions. Come on, you don't need a PhD to be able to think critically and, more importantly, ask critical questions. Yes, I have a PhD, but I have come across countless otherwise intelligent folks who simply accept something as gospel (i.e. look at the folks who are vaccine deniers, those who swear by naturopaths, etc.). Go figure . . . ps
5
I've been suspicious of this company since I heard about it: their product and marketing claims were easy to prove. Test with the state of the art equipment, test with their equipment, compare results, done. But they never did the most rudimentary of tests to demonstrate it worked.
It was like Solyndra all over again: it would have been very easy for the firm to prove its claims. There was nothing difficult about it. But they never did.
Tip for the future: if a firm makes claims about its business that are easy for the business to prove, but they don't bother, run away.
It was like Solyndra all over again: it would have been very easy for the firm to prove its claims. There was nothing difficult about it. But they never did.
Tip for the future: if a firm makes claims about its business that are easy for the business to prove, but they don't bother, run away.
5
Many of the commentators below seem angry about the failure, suggesting that company executives go to jail, etc. But this is how capitalism works, and it is a good system. Of course, if laws were broken regarding Theranos's testing process, there should be criminal charges. But there's nothing wrong with a venture capitalist making a losing bet. Even if Theranos fails, all that money went to building a company for years and providing people with jobs, and fortunes were made. Kissinger earned a fat paycheck and can now purchase a bigger boat, which is good for the economy (for example). Bernie Sanders supporters don't understand this; they think there should be no risk-taking at all, but this is what makes us a vibrant economy (unlike Europe). And luckily, unlike the Solyndra debacle, there was no taxpayer-financed investment in Theranos.
4
I'd like to correct the common misperception, conveyed by RP, that the US has the only vibrant economy, etc. due to capitalism, or risk taking.. Spotify, Skype, Minekraft, and many more world class brands are born and developed in Europe, Sweden in this case, as well as Island, Norway, France, and Finland and other places, making the concentration of startups per capita, much higher than in the US. Executives who mislead investors is common everywhere, and in this case, it remains to be seen if the courts will deem them criminal. At this point the obfuscations and lack of hard evidence look suspicious. If it is just a failure of the technology being bad, so be it. But if factual misrepresentations were made, thats another story. That has nothing to do with the definition or nature of capitalism.
6
Risk is one thing...fraud is another. Is investing just a "bet"? I guess you work on Wall street.
4
Company executives and investors should not be reaping millions of dollars from a failed enterprise. This is precisely NOT how capitalism works. This is Nero playing his fiddle while Rome burns.
4
No surprise that the lead in Theranos was Tim Draper; he's the guy who has sponsored another losing idea - i.e. breaking California into 6 states.
https://en.wikipedia.org/wiki/Six_Californias
Having met Draper a few times left me thoroughly unimpressed, like many other VC's in the Valley.
Incidentally, this Op-Ed whitewashes the mostly "follower" mentality among *most* of the VCs in Silicon Valley. The bio-science investors, compared to those who invest in purely digital Internet plays (including the biggest players, like Kleiner-Perkins, etc. etc.) , are light years more qualified and smarter than the bulk of Silicon Valley VCs.
Part of Silicon Valley culture involves king-and prince-making of some wealthy ex-startup type (like Peter Theil) happens to hit on one in 10 or 20 of his/her investments. Then, they find themselves suddenly in demand as "visionary investors" who end up preaching their "wisdom" about the world.
Silicon Valley is, sorry to say, a very toxic place where wealth and success at alomst any cost is the name of the game. In fact, thie mostly clueless groupof VCs who are given one laudit after another in the Valley have done little than spread their money around in the hope that some of it will stick in a way that make them filthy rich. The subculture that these VC types have spawned in the Bay Area favors wealth and smoke-and-mirrors above all. The Theranos debacle is part of that.
https://en.wikipedia.org/wiki/Six_Californias
Having met Draper a few times left me thoroughly unimpressed, like many other VC's in the Valley.
Incidentally, this Op-Ed whitewashes the mostly "follower" mentality among *most* of the VCs in Silicon Valley. The bio-science investors, compared to those who invest in purely digital Internet plays (including the biggest players, like Kleiner-Perkins, etc. etc.) , are light years more qualified and smarter than the bulk of Silicon Valley VCs.
Part of Silicon Valley culture involves king-and prince-making of some wealthy ex-startup type (like Peter Theil) happens to hit on one in 10 or 20 of his/her investments. Then, they find themselves suddenly in demand as "visionary investors" who end up preaching their "wisdom" about the world.
Silicon Valley is, sorry to say, a very toxic place where wealth and success at alomst any cost is the name of the game. In fact, thie mostly clueless groupof VCs who are given one laudit after another in the Valley have done little than spread their money around in the hope that some of it will stick in a way that make them filthy rich. The subculture that these VC types have spawned in the Bay Area favors wealth and smoke-and-mirrors above all. The Theranos debacle is part of that.
21
Medical testing isn't software, where a couple of kids in a dorm room can make real products. Medical testing builds on a large base of biomedical engineering, and there are billion dollar companies doing it. It was patently absurd that a college dropout with no biomedical engineering or biochemistry background could make a useful invention (based on the pious hope that phlebotomists could be replaced by needle sticks)---she had about as much chance of ever making this into a real business as if she had proposed to compete with GM building cars.
It is amazing that foolish investors bought into this chain letter as long as they did. But Bernie Madoff kept his scheme going for a long time, too. There is no end to human gullibility.
It is amazing that foolish investors bought into this chain letter as long as they did. But Bernie Madoff kept his scheme going for a long time, too. There is no end to human gullibility.
7
A simple common as dirt case of misdirection and hyperbole to make money from naive investors.
If we weren't all being so nice we'd just say it; She ran a con on a lot of people who don't want to think they fell for a lie mostly because the face that told it was pretty.
If we weren't all being so nice we'd just say it; She ran a con on a lot of people who don't want to think they fell for a lie mostly because the face that told it was pretty.
8
Scams generally work because those being scammed want some version of something for nothing. The truth nearly always wins out, but sometimes it takes years or decades.
Holmes fit a mythical narrative, but seems to have skipped a few foundational steps, including integrity ... and now the truth is out.
Those duped followed the old formula for failure: suckered by appearances and an incomplete and faulty examination of all relevant factors, before moving forward.
When you do your diligence the right way it is a lot easier to conclude what course of action actually makes sense. It's an old story in all industries and levels of society. People of similar values find one another, not just in Silicon Valley.
Holmes fit a mythical narrative, but seems to have skipped a few foundational steps, including integrity ... and now the truth is out.
Those duped followed the old formula for failure: suckered by appearances and an incomplete and faulty examination of all relevant factors, before moving forward.
When you do your diligence the right way it is a lot easier to conclude what course of action actually makes sense. It's an old story in all industries and levels of society. People of similar values find one another, not just in Silicon Valley.
5
The storyline is common in the VC business: a deep pocketed VC investor has personal relations with a project developer. He buys the story without doing too much checking, because the money involved is relatively small. He tells a few people about it and when the rumor mill starts, everybody wants in, assuming that Draper has done his due diligence. Kissinger and Schultz get free shares and know that since Draper is in, they will make truck loads of money at the IPO, and dont bother to check the background facts. This is story line is much more common in SV/Stanford than most people think; Bezos was one of them but he managed to load up so much debt that he became too big to fail..the saving grace in this case is that no unsuspecting small investor got sucked in...
what I fail to see is why Stross is writing this now and why the NYT asked him to? Its not only old news, by a year or so, and the idea that this is unique is laughable. Let him write for Huff Post or something..
what I fail to see is why Stross is writing this now and why the NYT asked him to? Its not only old news, by a year or so, and the idea that this is unique is laughable. Let him write for Huff Post or something..
2
I don't believe Ms. Holmes is a con artist. But Theranos' long fall is still extremely satisfying for the following reason: at the end of the day, one can't substitute rigorous scientific and mathematical skills for media hype, a tantalizing origin story, and 'coolness'. Overvaluations of hip, useless apps are merely another bubble, whereas the truly meaningful and practical Silicon Valley inventions endure on the basis of work performed by experts.
Facebook and Microsoft began with a pack of nerds. Jobs' signature turtleneck and Levi's are meaningless without the obsessive genius wearing them. And truly useful medical advancements are never born in glossy, hip companies-- they're painstakingly perfected in respected research labs, over a span of decades.
Facebook and Microsoft began with a pack of nerds. Jobs' signature turtleneck and Levi's are meaningless without the obsessive genius wearing them. And truly useful medical advancements are never born in glossy, hip companies-- they're painstakingly perfected in respected research labs, over a span of decades.
9
Let's establish what matters first. A) Making money or B) improving/saving lives? In the entire healthcare industry the message of B) is mostly used for the purpose of achieving A)
If A) The opinion of cogent investors (MPM, GV) didn't really matter; initial investors were found and they made money. Company spun a story, media bought it, public swallowed it. Initial investors laughed all the way to the bank.
If B) Biggest flag of all, a CEO with zip, zero, nada achievements in life sciences. No degree, no publications, nothing. A lot of hand waving and that's it. But again, B is not what matters in life sciences.
If A) The opinion of cogent investors (MPM, GV) didn't really matter; initial investors were found and they made money. Company spun a story, media bought it, public swallowed it. Initial investors laughed all the way to the bank.
If B) Biggest flag of all, a CEO with zip, zero, nada achievements in life sciences. No degree, no publications, nothing. A lot of hand waving and that's it. But again, B is not what matters in life sciences.
5
It is a wake-up call for Silicon Valley’s operational attitude towards healthcare. Silicon valley’ success is based on race to market an imperfect product with secret recipe that is expected to evolve with numerous variations and releases in every few months. The product needs to work just enough to have some stickiness and does not need to be liked or to benefit vast majority of users. Healthcare does not work that way. Healthcare products need long research and development process, independent multi-location tests often run by people with competing interests, and once the product is in market it cannot be refined repeatedly as is done with software version release. The fundamental idea behind Theranos to accelerate diagnosis is not bad nor is new. The execution of this idea was done with the typical Silicon Valley approach. As Silicon Valley titans are poised to play a major role in healthcare, such events are inevitable and are necessary learning opportunities. A similar bubble is brewing in the area of digital health and nutrition, where billions of new investment dollars are pouring in to some unsustainable ventures or low hanging fruits without thoughtful long term investment into understanding the causes of diseases or innovation in disease management. Silicon Valley has been a powerful enabler of accelerating human productivity or entertainment. Now is the time for them to be true innovators to improve the quality of life.
2
Maybe Randall Stross' general analysis is correct, but his reliability is undermined by a stupid particular assertion. Tim Draper (b. 1958) was hardly a "childhood neighbor and playmate" of Elizabeth Holmes (b. 1984). Their 26-year age difference would make them odd playmates indeed.
8
The pathology community was very skeptical from the start. Their lab director was an internist not a pathologist. Very troubling.
7
The problem with this article is summed up in the last sentence - "Theranos might still prove viable". Isn't that why VCs invest in a company?
So after giving a laundry list of things which seem to lead to a conclusion that should have said the confidence in Theranos being a feasible technology is extremely low it seems to me that Mr. Stross does an about face and indicates there might still be value!
So after giving a laundry list of things which seem to lead to a conclusion that should have said the confidence in Theranos being a feasible technology is extremely low it seems to me that Mr. Stross does an about face and indicates there might still be value!
2
Maybe you could explain the contradiction you are attempting to highlight because pointing out issues with the development and hyping of Theranos while admitting that the technology could still work, does not appear to be contradictory.
3
The troubles at Theranos weren't difficult to spot. I, for instance, read an profile of Ms. Holmes and Theranos in a popular magazine a couple of years ago and I had concluded that it was all a scam before I'd even finished. I am no business genius, but I am a patent attorney and I have worked with a lot of medical device startups and, as a result, I am pretty adept at recognizing smoke and mirrors when I see it. In my opinion, anyone who didn't see the red flags at Theranos was willfully blind.
51
Investing in bio-tech startups and indeed even large pharmaceutical companies is very risky. In 95% of those small start-ups, investors will lose money.
As a semi-retired clinical physician and investor, I am very aware of the hype and nonsense that surrounds a lot of these drugs or tests. My clinical experience puts me ahead of most academic physicians and PhDs when it comes to whether a drug will be accepted or not.
When EXAS was flying high, it was clear to me years ago that the Cologuard would not supplant the colonoscopy, though most experts thought otherwise. I knew what patients would and would not accept. Likewise, ESPR currently has an anti-cholesterol drug out that is flawed in a way that the experts are not aware of, or downplaying. The FDA will likely "long-track" the drug, if it is approved at all.
The article makes a very good point. To invest successfully in biotech, one must have a very strong background in the sciences and clinical medicine.
In other words, the average investor should avoid them entirely.
As a semi-retired clinical physician and investor, I am very aware of the hype and nonsense that surrounds a lot of these drugs or tests. My clinical experience puts me ahead of most academic physicians and PhDs when it comes to whether a drug will be accepted or not.
When EXAS was flying high, it was clear to me years ago that the Cologuard would not supplant the colonoscopy, though most experts thought otherwise. I knew what patients would and would not accept. Likewise, ESPR currently has an anti-cholesterol drug out that is flawed in a way that the experts are not aware of, or downplaying. The FDA will likely "long-track" the drug, if it is approved at all.
The article makes a very good point. To invest successfully in biotech, one must have a very strong background in the sciences and clinical medicine.
In other words, the average investor should avoid them entirely.
31
She did pick an area where innovation is extremely difficult; and for that she should be applauded.
Recall that the Food and Drug Administration did not start regulating medical devices until 1976. Earl Bakken, the founder of Medtronic came up with an improved pacemaker which was put on a patient (without approval) and thus had success (late 1950s). In 2011, my Dad had a defibrillator placed (made by Medtronic) for which I sincerely am grateful to Mr. Bakken.
I'm not stating that she is entirely without fault. But innovation in healthcare may have been inhibited by arduous regulations. Some regulation are warranted and some not so much. Investing and innovating in healthcare is thus extremely difficult.
Recall that the Food and Drug Administration did not start regulating medical devices until 1976. Earl Bakken, the founder of Medtronic came up with an improved pacemaker which was put on a patient (without approval) and thus had success (late 1950s). In 2011, my Dad had a defibrillator placed (made by Medtronic) for which I sincerely am grateful to Mr. Bakken.
I'm not stating that she is entirely without fault. But innovation in healthcare may have been inhibited by arduous regulations. Some regulation are warranted and some not so much. Investing and innovating in healthcare is thus extremely difficult.
9
The issue with Theranos is not regulation: its transparency. I would hope that no physician would have placed an experimental pacemaker in a patient without knowing what was "in the box." Theranos is a black box of blood testing and that is its problem. Regulations did not stop them from introducing their products to an unsuspecting public.
4
As an active participant in the Silicon Valley ecosystem Stross describes, I take issue with the arrogant assertion that there are 30-40 "special" venture capital firms that account for almost all successful companies. His disdainful characterization of companies and investors who are not part of the "club" insults the talents and efforts of many hard-working, brilliant and successful people.
It may be the case that, by the time, if ever, that a liquidity event rolls around for a startup, it is probable that one or more of these firms will have invested in the company, but I doubt it. Stross perpetuates the mythology of the genius of the Valley's elite venture capital firms but in reality returns on the venture capital asset class have been poor since the market break of 2001 and past performance of certain funds has not been predictive of future results. Even Kleiner Perkins has had poor performing funds.
The fact is that not even "second" or "third" tier venture funds backed Theranos. The lack of scientific chops on its board and in its management team were warning signs that most of his bar patrons recognized.
It may be the case that, by the time, if ever, that a liquidity event rolls around for a startup, it is probable that one or more of these firms will have invested in the company, but I doubt it. Stross perpetuates the mythology of the genius of the Valley's elite venture capital firms but in reality returns on the venture capital asset class have been poor since the market break of 2001 and past performance of certain funds has not been predictive of future results. Even Kleiner Perkins has had poor performing funds.
The fact is that not even "second" or "third" tier venture funds backed Theranos. The lack of scientific chops on its board and in its management team were warning signs that most of his bar patrons recognized.
39
Keep chasing the dream!
Why not develop an app to replace Silicon Valley venture capitalists? I'm sure it would do as well, cheaper too.
26
Will the app come with deep pockets and a discriminating eye for value and innovation?
1
But the media touts Theranos as the latest Silicon Valley Darling.
So I guess the blame goes....
So I guess the blame goes....
13
Excellent insight. Finally something past the hype.
7
I remember reading adoring profiles about Ms Hollmes and Theranos a few years ago. With only my lowly b.s. In biochemistry that is dated and unused, I thought that nothing she is saying Theranos can do sounds plausible (though incredible if delivered!). So it leaves me feeling very uneasy about the implications for us ordinary folks when the rest of this tech bubble starts to burst
24
When I read about the need to privatize social security and the freedom to invest and grow should be with the worker I think of cases such as this. A little greed + some market inexperience = negative return. These companies and ventures are for those that can afford to lose.
21
Gee whiz, I know corporations are people now, but that indication meaning "born," as in Walgreens (b. 1901) and Theranos (b. 2004) still strikes me as a little creepy. This might not be "Silicon Valley hype," but it's hype nonetheless. Entities with beating hearts are "born," so let's not buy this subtle rhetorical nonsense.
33
One of the worst things the hippies did to us among the many evils they perpetrated in their youthful naivete was to destroy formality. The correct formal use of English makes clarity more certain and misdirection and diversion more difficult.
Even the most dishonest will choose to misdirect rather than straight up lie if they think they can get away with it. Once caught in a lie one is a liar and cannot be trusted. If one is misdirecting one can prevaricate and make it seem an unintentional confusion.
Even the most dishonest will choose to misdirect rather than straight up lie if they think they can get away with it. Once caught in a lie one is a liar and cannot be trusted. If one is misdirecting one can prevaricate and make it seem an unintentional confusion.
1
.
I respectfully demur
I, Big Brother's Big Brother (b. 1947), am not to be confused with my brother, Big Brother (b. 1949)
and I wish to thank the New York Times (b. 1851) for the opportunity to make this clear
.
I respectfully demur
I, Big Brother's Big Brother (b. 1947), am not to be confused with my brother, Big Brother (b. 1949)
and I wish to thank the New York Times (b. 1851) for the opportunity to make this clear
.
“Every smart prospective partner of a life sciences start-up looks for strong peer-reviewed publications. It’s a way of getting expert due diligence at zero cost.”
No it's not zero cost. Wasn't there a recent article in the Times about how extremely costly these journals are to the libraries that subscribe to them? Annual subscriptions of $10,000 and up? Maybe those investors in the top 10% with their ten-times-as-high returns can spare a few relative pennies to support their due diligence proxies.
http://www.nytimes.com/2016/03/13/opinion/sunday/should-all-research-pap...
No it's not zero cost. Wasn't there a recent article in the Times about how extremely costly these journals are to the libraries that subscribe to them? Annual subscriptions of $10,000 and up? Maybe those investors in the top 10% with their ten-times-as-high returns can spare a few relative pennies to support their due diligence proxies.
http://www.nytimes.com/2016/03/13/opinion/sunday/should-all-research-pap...
18
As a physician, I too wondered what the heck Kissinger and Schultz were doing on the board of a biotech firm.
However, I do wish to note that even with all those Ph.D.s and M.D.s at those VC firms, they still make make many choices that don't work out.
However, I do wish to note that even with all those Ph.D.s and M.D.s at those VC firms, they still make make many choices that don't work out.
23
Most "choices" (i.e., bets) are not supposed to work out. VCs take big risks for big payoffs. However, those risks are calculated risks based on performing due diligence. This is the big difference between a physicians worldview (based on thorough studies on a black-box model of a human body) and a high-stakes technology. Only 10% of the companies will succeed but the payout may be many times the 90% loss incurred.
3
Randall Stross - what a cogent and lucid article. Thanks.
20
This article points out what should be obvious - there is a VAST difference between expertise in biochemistry (which is really the business that Theranos is in) and computers. I spent 4 grueling years at a prestigious university earning a BS in Biochemistry, followed by 5 years as a lab technician. But you can't do ANYTHING in biochemistry without a phD - not because it is "required to be hired", but because there is way too much to learn - so I switched gears and got a masters in engineering, then fell into a software engineering job where, after a couple of months of in-house courses I became a senior programmer within 2 years - USING ABSOLUTELY NOTHING THAT I LEARNED IN COLLEGE. My point? Biochemistry requires massive amounts of formal education, but computer software can be self taught.
Apple routinely hires high school grads, Bill Gates dropped out of college, and nobody thinks twice about using their products. But I very much doubt the Mayo Clinic hires surgeons who never went to medical school.
Apple routinely hires high school grads, Bill Gates dropped out of college, and nobody thinks twice about using their products. But I very much doubt the Mayo Clinic hires surgeons who never went to medical school.
319
I am a PhD, having just turned 60, started my small company 10 years ago with a therapeutic target in hand, and now, using all my know how from years of training and failure in molecular biology and drug development, I may finally have found a mitochondrial therapeutic to slow the progression of ALS and other neuropathies linked to aberrant protein aggregation.
I truly believe that someday a Stanford grad student, with an Apple laptop in hand, will find the cure for cancer because all the data is out there (Steve Jobs).
All of us working together in a respective disciplines.
I truly believe that someday a Stanford grad student, with an Apple laptop in hand, will find the cure for cancer because all the data is out there (Steve Jobs).
All of us working together in a respective disciplines.
try being a chemist is this ecosystem.. you are disrespected even when you perform magic.
Geofrey,
Your story is very similar to mine. I too earned a BS in Biochemistry and worked as a lab technician at the Institute for Cancer Research at Fox Chase for five years. Frustration with the politics and slow pace of academic research led me to leave science and not pursue a PhD in Biochemsitry. I obtained a masters in Chemical Engineering and worked in private industry for over 30 years before retiring last year.
Early in my engineering career, I was drafted into industrial R&D for a two year project where, I made a major discovery in the arcane filed of metals combustion. My previous biochemical R&D experience was a major factor that I was selected by the company management to do this research despite this work having no relationship to the industrial gas world or the technology used there.
Ironically, the work I participated in at Fox Chase eventually was usurped by a another researcher there who received a Nobel prize for it some 20 years later. As far as I know, there have been no clinical applications for this award winning work in Biochemistry.
Despite my experience in the world of biological sciences, every investment that I have ever made in health science start ups has been a total loss. I used to think commercial success for these ventures as a one in ten shot, but I now believe it's more like one or two out of a hundred. I would not nave considered Theranos as a legitimate candidate for the reasons given in the article.
Your story is very similar to mine. I too earned a BS in Biochemistry and worked as a lab technician at the Institute for Cancer Research at Fox Chase for five years. Frustration with the politics and slow pace of academic research led me to leave science and not pursue a PhD in Biochemsitry. I obtained a masters in Chemical Engineering and worked in private industry for over 30 years before retiring last year.
Early in my engineering career, I was drafted into industrial R&D for a two year project where, I made a major discovery in the arcane filed of metals combustion. My previous biochemical R&D experience was a major factor that I was selected by the company management to do this research despite this work having no relationship to the industrial gas world or the technology used there.
Ironically, the work I participated in at Fox Chase eventually was usurped by a another researcher there who received a Nobel prize for it some 20 years later. As far as I know, there have been no clinical applications for this award winning work in Biochemistry.
Despite my experience in the world of biological sciences, every investment that I have ever made in health science start ups has been a total loss. I used to think commercial success for these ventures as a one in ten shot, but I now believe it's more like one or two out of a hundred. I would not nave considered Theranos as a legitimate candidate for the reasons given in the article.
The only revolutionary aspect of Theranos was its founder's attempt to keep secret its methods and results in a Health Care Provider business. While secrecy may be the norm in the recipe for Coca-Cola, it is beyond the pale in health critical data products like lab test. Not long ago, a medical device company tapped me to to write a peer-reviewed journal article describing the algorithms underlying its revolutionary brain wave analysis system. That article was published along with over 100 supporting clinical studies and trial reports. That is the norm in clinical science. Certainly not the PR-driven unqualified pretty CEO who hired retired Republicans to influence the regulatory environment (and failed).
161
First time I read about Theranos, I was wondering how a Stanford drop out was going to come up with a laboratory testing revolution, with no training in any field of biotechnology or health. I am a physician, and I know how difficult it is for regulatory agencies to approve any new technology that may have an adverse impact in patient health. To me this is a fiasco, trying to substitute a solid educational and experience background with a public relations campaign.
165
VC firms pick losers every year. What might be interesting when one invests in a winner that produces something beyond a game or app to serve humanity. Silicon Valley, for all its aura and mystique, has for the most part leveraged the internet (created by public sector) for its own gain the past decade.
12
While it may be true that only a narrow group of VC's have most of the big wins, it is simply not true that this reflects a high hit rate, in any sector. The fact is that VC investing is incredibly hard and like an extreme form of baseball (where even a high failure rate can still mean that you are really good).
It's easy to tell the necessary story after the fact, either for success or failure. These are mostly self-serving and server as levers for self-promotion or competitive criticism. Sometimes huge successes do start outside of the valley core and sometimes in the core. The core definitely has some merits, particularly its ability to execute reasonable sales exits (a much more likely scenario for most companies).
The real story here is the difference between start-ups based on science (like bio) versus engineering (software). Science is the hardest bet of them all.
It's easy to tell the necessary story after the fact, either for success or failure. These are mostly self-serving and server as levers for self-promotion or competitive criticism. Sometimes huge successes do start outside of the valley core and sometimes in the core. The core definitely has some merits, particularly its ability to execute reasonable sales exits (a much more likely scenario for most companies).
The real story here is the difference between start-ups based on science (like bio) versus engineering (software). Science is the hardest bet of them all.
53
It really is more like gambling where if you're right 55% of the time you're doing great
1
But what this column is saying is that there are two tiers of VC, of which the elite saw the red flags of Theranos from the get-go. Which is likely why they are generating returns of over 10x that of the lower 90% of VC firms.
You are drinking the Koolade. Building and running companies with profitable business models and strategies is hard. Throwing money at a wing and a prayer is easy. Competing to participate in a wing and a prayer with OPM is foolish.
Whatever. every failure has its drama. But the only question of value in this story now is, what is the ratio of wishful thinking to fraud that was at work inside the company? And given the industry (medicine), doesn't wishful thinking amount to negligence, in any case?
5
It's it negligence. That's why they're being criminally investigated.
5
The company sure got a lot of money from people who saw right through it
44
Many start-ups fail - don't deliver on their promises technical or otherwise - including those backed by the top rung VC firms. Its the nature the game. Theranos perhaps should have attempted a lower profile until proven.
20
This is a really good point. The only reason we are talking about Theranos is because it was built up so much in the media. Otherwise, it would barely get a passing mention on DealBook, if at all, as another failed startup (among thousands of others). A corollary of this is whether Theranos could have avoided or mitigated regulatory scrutiny by keeping its mouth shut until it could show people the goods.
1
The point in this article and the investigations is that there is no there, there which makes what Theranos and its founder have done fraud.
This is a helpful article, with some interesting data and information. The question isn't whether SV VC firms take chances, some of which fail epically -- they all do. The question is whether Theranos (rhymes with Thanatos) deserves the positive attention it's gotten and, more fundamentally, why it's gotten that level of attention. The one aspect of the story that stands out but that NYTs commenters seem loathe to broach is the sexual one. Or: there's something particularly sexy (to many readers -- the mainstream we might call them) about a young blonde woman who's both frighteningly attractive, and frighteningly unavailable (she's got access to billions of dollars and to Henry Kissinger, and wears only black (what's that all about, by the way?)) out on her own and now, possibly, a damsel in distress. I think it's a form of politeness gone viral that keeps most well-heeled writers from exploring this territory (plus, of course, it feels downright Tumpian to barge into it), but this writer can come up with no other reason for this debacle. And to be clear, the debacle isn't that the Theranos technology won't work -- it still might -- it's rather that this story would have been reported on page D36 five years ago and that's the last we would have heard of it, if not for some visual features that play to a classic trope -- a trope that, just to be clear, is sexist. But it's very much there. I apologize for saying so....
17
So there's been no debacles with men? Attractive or not? None? And she is frighteningly attractive? Maybe to you. There are men would not make her out to be that (some not even attracted to "blondes", or even think her unavailable. Has nothing to do with politeness - since when has media been polite to women? Thanks.
2
Am I the only one who finds this pretty funny? That she played her family connections, looks and the gullibility of the media to sign up a bunch of prominent dirty old men to her board?
Would love to be a fly on the wall for the next meeting!
Would love to be a fly on the wall for the next meeting!
29
Probably had nothing to do with it. As with members of most boards, they probably signed up for a big pay check for which they had to do no work.
The sad thing is that board members often claim they are working hard for those checks but when companies get into legal trouble they then claim they had no knowledge of what went on in them.
The sad thing is that board members often claim they are working hard for those checks but when companies get into legal trouble they then claim they had no knowledge of what went on in them.
9
Couldn't agree more. I feel bad for some of the people sucked into this, but by no means all.
This is one of the more weirdly written and edited pieces I've seen in the Times. Shame, too, given the serious nature of the content, which is buried beneath indecipherable or unnecessary expressions and analogies. Where was the editor on this?
16
This article is laughable. You're right, everyone in Sillicon Valley "proper" is a genius. The rest of America got tricked by second-tier investors (idiots, by virtue of their premises on the periphery of God's land, where rent might be lower) and Walgreens. Yeah, Walgreens.
Your due diligence unveiled this firm for a sham, but you decided to wait for a Pulitzer winning journalist to actually look into the company and take the risk before you said anything -- to preserve your reputation, of course (read: your GPS coordinates). Perfectly reasonable. If the technology was in doubt, and Americans' lives were potentially endangered, as the bumbling, vain denizens of the media and government agencies seem to suggest, did you suffer no moral compunctions to speak up? Or were you more interested in getting in on the next round?
Let's not forget that Tim Draper is associated with the storied firm that just happens to bear his name: DFJ.
If only the rest of Americans had such omnipotence. Maybe they'd choose the right zip code.
Your due diligence unveiled this firm for a sham, but you decided to wait for a Pulitzer winning journalist to actually look into the company and take the risk before you said anything -- to preserve your reputation, of course (read: your GPS coordinates). Perfectly reasonable. If the technology was in doubt, and Americans' lives were potentially endangered, as the bumbling, vain denizens of the media and government agencies seem to suggest, did you suffer no moral compunctions to speak up? Or were you more interested in getting in on the next round?
Let's not forget that Tim Draper is associated with the storied firm that just happens to bear his name: DFJ.
If only the rest of Americans had such omnipotence. Maybe they'd choose the right zip code.
33
If Ms. Holmes were not young, attractive, and blond she would not have been able to dazzle investors with an insubstantial and untested business model. If Theranos comes crashing down, as it appears it will, people will act surprised. Bernie Madoff's clients were surprised, too. A fool and his money are soon parted.
33
Bernie was no beauty!
2
Young, attractive, blonde and female. Don't forget we need more women in IT.
6
Great piece and absolutely accurate. By the way, as a rule of thumb, appearing on the cover of Forbes or Fortune is usually a kiss of death and a signal to sell.
15
Very few people do not clamor for a "magic bullet" in medicine and health care, and likely in most other life and economic choices. Everyone wants to beat death, and in the process, lead as rich a life as is possible. Sadly so many see a rich life as having lots of things.
Ms. Holmes was a perfect storm that reaped reward from this all too human trait. She is articulate, smart, attractive, seemingly well connected, and appears to be a zealot in her beliefs about the technology she has pursued. First tier, second tier or distant tiers, she was bound to attract some investors and lots of attention. She dangled a magic bullet, but it seems to have backfired.
Ms. Holmes was a perfect storm that reaped reward from this all too human trait. She is articulate, smart, attractive, seemingly well connected, and appears to be a zealot in her beliefs about the technology she has pursued. First tier, second tier or distant tiers, she was bound to attract some investors and lots of attention. She dangled a magic bullet, but it seems to have backfired.
37
The only reason Theranos got off the ground in any way is because it was founded by a woman. The media and the tech sector in general are so desperate for a Stephanie Jobs that they're willing to give the women a completely free pass to the standards men are held to. Is it any surprise that a calculating fraudster like Ms. Holmes saw that she could leverage her being a woman into a fortune for herself with none of the accountability that a man would face? No, it isn't.
16
I know, right? Same old story--seems like we read one of these every day. Those women and their female privilege and their free passes. If only she faced the accountability that a MAN faces! Like Bill Cosby! Or Jamie Dimon! Or Scooter Libby! Or Angelo Mozilo! Or Ted Stevens! Or David Petraeus! Or Cardinal Law! Or any Kennedy! Geez.
28
Way to demonstrate that what I said went completely over your head. I'd say you're trying to compare apples to oranges, but at least those are both fruits of similar size. A more appropriate analogy would be trying to compare apples and rocks.
And here I was thinking--what if this went completely over my head? What if this was pure satire? Because surely someone wouldn't write a serious post claiming that a young woman, working in the intersection of business, technology, and science, is being held to a LOWER standard than men.
2
The possible failure of the Board ought also be part of the story. Lack of technical knowledge requires that Board members be educated by themselves and by management, and create tension in the boardroom as they push for real data and real answers. The Board ought to be in full-crisis mode at present; if Ms. Holmes is in full charge then they ought to still be pushing in accord with their statutory rights. Let her vote them off the Board at the next annual meeting if she wants, but query who would serve as replacements.
6
When I first heard about Theranos and learned that she was only a sophomore when she dropped out and then I looked who was in the board, I was astounded. There was nothing there. No regulatory expertise, no peer reviewed articles, nothing. Why did people invest? Biotech is hard and unforgiving business. You need to know what you are doing. Advanced degrees are a must.
81
Does this mean that the New York Times has finally seen through Theranos and de-turtlenecked St Elizabeth after her elevation to sainthood in the Times some months back?
25
This really is baloney. There three scenarios here:
1. Everyone was taken in by Theranos
2. A handful (five ? six?) of the superior VC firms as Stross suggests were not taken in and were able to keep these suspicions secret for a decade (although Stross doesn't go into their motivations for keeping quiet).
3. Scenario 2, but after a few years the doubts leaked out into the wider VC community but there was effectively a conspiracy of silence because discrediting one new bio tech firm could have a serious effect on the valuations of bio tech/tech start up generally and thus any future IPO's.
Now which of these do think is most likely? Trying to shift the blame onto the media for all this as if VC firms aren't experts at manipulating the media and don't employ armies of flacks and medical shills to do so is risible. Ultimately it was the media in shape of the Journal that exposed this apparent scam.
1. Everyone was taken in by Theranos
2. A handful (five ? six?) of the superior VC firms as Stross suggests were not taken in and were able to keep these suspicions secret for a decade (although Stross doesn't go into their motivations for keeping quiet).
3. Scenario 2, but after a few years the doubts leaked out into the wider VC community but there was effectively a conspiracy of silence because discrediting one new bio tech firm could have a serious effect on the valuations of bio tech/tech start up generally and thus any future IPO's.
Now which of these do think is most likely? Trying to shift the blame onto the media for all this as if VC firms aren't experts at manipulating the media and don't employ armies of flacks and medical shills to do so is risible. Ultimately it was the media in shape of the Journal that exposed this apparent scam.
23
I am so tired of people pointing to Bill Gates and Steve Jobs as two reasons why no one really needs a college degree. Even if you are a billionaire getting an education has intrinsic value in and of itself. Ask Bill Gates if he would hire anyone now without a degree. If Ms. Holmes finds that her start up fizzles out or takes too long to develop she might consider going back to school. Silicon Valley is not likely to fund another venture from someone so ill prepared.
25
Bill Gates and Steve Jobs didn't exactly come from poor families either. They could afford to drop out of college. They also received massive financial support to get their businesses started.
10
Was there ever a 16-page point-by-point rebuttal to the WSJ openng salvo's as reported in the NYT's on Oct. 22, 2015 Pg. B1 ?
5
Class (VC) warfare in Silicon Valley? Fascinating that the author spends the entire post lambasting the short-comings of the VC underdogs while impeaching us 'not to blame Silicon Valley.' Apparently, SV is comprised of 'elite' investors with know-how who are the REAL SV, along with groveling less-than hangers-on begging for scraps. (the ones to be blamed for this and similar messes.)
When one performs due diligence on the authors claims that the dogs don't matter, what becomes apparent is the disparity in the calculation. More money to spend on more deals will inevitably lead to more losses and also more successes. That the name VCs are able to do their jobs with the gargantuan funds they've accumulated over the years is a yawn - what would really be a story is if they failed statistically more like the 'dogs' - less money to invest, more failures, fewer wins until a certain threshold is reached.
The Theranos story isn't over until it's over. The fault of naive SV Investors? This reads like just another calculated media manipulation
When one performs due diligence on the authors claims that the dogs don't matter, what becomes apparent is the disparity in the calculation. More money to spend on more deals will inevitably lead to more losses and also more successes. That the name VCs are able to do their jobs with the gargantuan funds they've accumulated over the years is a yawn - what would really be a story is if they failed statistically more like the 'dogs' - less money to invest, more failures, fewer wins until a certain threshold is reached.
The Theranos story isn't over until it's over. The fault of naive SV Investors? This reads like just another calculated media manipulation
11
As a physician, to me, it was much more simple - if they really could do bloodwork using a drop of blood -- I mean, forget it, it's over....they would dominate a widely used product. She deserved the billions. But, it was just taking too long -- starting in 2004 and still no widely available complete blood count via a drop of blood almost a decade later. The big stories, the easier stories have easier facts and thus easier sells -- the best search results based off popular linking, 400-mill users in a social network with a clean interface and that was appealing (at least then) to multi-generational users, a home based operating system that was accessible and let you continue office work if needed. The Theranos story was tantalizing, but they never delivered upon what they promised. It's reassuring that Mr. Stross says SV proper does its homework. But, it still does not change the adage about fools and their $. It's sad, I was really rooting for her to go far as a woman out there and in a STEM field too.
14
I can't disagree with the concept that Theranos was a thin idea from the start. The articles that were nothing more than adoring paeans to the turtleneck-bedecked founder, yet contained absolutely bupkis on the technology? They might as well have said that the tests ran on magic, for all the information they gave.
But this smug and self-satisfied article does the Silicon Valley VC industry no favors... I do seem to recall these legendary, supposedly-wise, VC firms taking an absolute bloodbath during the .com crash, the telco crash, and, in the life sciences, the ongoing failure of genomics to deliver much of anything they can actually sell. (Celera Genomics, anyone?)
But this smug and self-satisfied article does the Silicon Valley VC industry no favors... I do seem to recall these legendary, supposedly-wise, VC firms taking an absolute bloodbath during the .com crash, the telco crash, and, in the life sciences, the ongoing failure of genomics to deliver much of anything they can actually sell. (Celera Genomics, anyone?)
19
There may be VC firms with differing skills in due diligence; there is only one VC firm business model. That business model makes money for its owners by driving investment and to a degree, 'hyping' the next great investment opportunity. Companies like Theranos will happen again.
Little publicized is the reality that VC firms invest very little of their own funds in their ventures. VC firms convince outside parties to invest into closed funds which are then managed with very little transparency until the fund closes, usually 5-10 years later. VC firm owners reap generous management fees, usually 2% of the fund value per year.
Under these ground rules, there is an incentive to grow the size of a VC fund and hype the potential 'unicorns' the VC firm can invest in. Theranos, with a compelling foundation myth, a black turtleneck wearing rebel founder, and a plausible value proposition would have been a dream come true with a huge payout in management fees.
Little publicized is the reality that VC firms invest very little of their own funds in their ventures. VC firms convince outside parties to invest into closed funds which are then managed with very little transparency until the fund closes, usually 5-10 years later. VC firm owners reap generous management fees, usually 2% of the fund value per year.
Under these ground rules, there is an incentive to grow the size of a VC fund and hype the potential 'unicorns' the VC firm can invest in. Theranos, with a compelling foundation myth, a black turtleneck wearing rebel founder, and a plausible value proposition would have been a dream come true with a huge payout in management fees.
18
The whole thing smelled of PR and snake oil from the outset.
Theranos was promising to upend the lab industry in one fell swoop without a single patent that had been tested and verified to undergird it. Disruptive technologies come along, but the players in lab science are not fat contented incumbents that would be easy pickings.
Next was the inability to scale. If they had the technology in place and it was viable they should have been able to roll out things nationwide long ago.
Next, what practitioner would have missed the disparate results from Hospital and Clinic Labs compared to the snake oil Theranos was providing? Every Hospital Lab runs QA tests every day and compares them to reference levels. There is no way that Theranos could have been doing proper QA and not known their results were inaccurate and medically dangerous to patients. Ask any Lab Tech that works at a local Hospital or central lab testing facility.
Ms Holmes and her compatriots need to be charged with fraud, reckless endangerment and conspiracy for their actions. If convicted, any court judgement should ban her from the life sciences industry for life.
Theranos was promising to upend the lab industry in one fell swoop without a single patent that had been tested and verified to undergird it. Disruptive technologies come along, but the players in lab science are not fat contented incumbents that would be easy pickings.
Next was the inability to scale. If they had the technology in place and it was viable they should have been able to roll out things nationwide long ago.
Next, what practitioner would have missed the disparate results from Hospital and Clinic Labs compared to the snake oil Theranos was providing? Every Hospital Lab runs QA tests every day and compares them to reference levels. There is no way that Theranos could have been doing proper QA and not known their results were inaccurate and medically dangerous to patients. Ask any Lab Tech that works at a local Hospital or central lab testing facility.
Ms Holmes and her compatriots need to be charged with fraud, reckless endangerment and conspiracy for their actions. If convicted, any court judgement should ban her from the life sciences industry for life.
110
Is SV really that much smarter? Only a couple of years ago we were reading about the shakeout in which half of SV biotech and life-sciences VC's had gone out of business.
7
There were people in finance who were not totally blindsided by the events of the 2008 crash, and some small number made money betting on failure, or at least sheltered themselves from the worst of it.
Despite this, it would be disingenuous to claim that we shouldn't blame the nebulous entity of "Wall Street" for this catastrophic failure; they created the conditions that lead to instability and unwise investment, then made choices that compounded those mistakes. Although some of them got out the way before it all came down, most of them were caught in the trainwreck like the rest of us.
To me, Theranos is the same story writ small.
It may be true that a handful of SV's best and brightest saw them as fraudulent, but largely that was not the case. Good money followed bad, to the tune of $billions.
Is it possible that this money came from buffoons that don't represent the larger tech universe? Certainly. But there seems to be quite a lot of buffoons if they can scratch together several billion dollars. This implies that the people funding the sector are no wiser than the public generally, and just as susceptible to the hype machine.
And I would contend that those "smartest guys in the room" who saw this coming and declined investment are still complicit by fostering an environment where billion dollar valuations for unheard of companies, based on nothing in particular, are the new normal.
There's plenty of blame to go around, and SV should have their share of it.
Despite this, it would be disingenuous to claim that we shouldn't blame the nebulous entity of "Wall Street" for this catastrophic failure; they created the conditions that lead to instability and unwise investment, then made choices that compounded those mistakes. Although some of them got out the way before it all came down, most of them were caught in the trainwreck like the rest of us.
To me, Theranos is the same story writ small.
It may be true that a handful of SV's best and brightest saw them as fraudulent, but largely that was not the case. Good money followed bad, to the tune of $billions.
Is it possible that this money came from buffoons that don't represent the larger tech universe? Certainly. But there seems to be quite a lot of buffoons if they can scratch together several billion dollars. This implies that the people funding the sector are no wiser than the public generally, and just as susceptible to the hype machine.
And I would contend that those "smartest guys in the room" who saw this coming and declined investment are still complicit by fostering an environment where billion dollar valuations for unheard of companies, based on nothing in particular, are the new normal.
There's plenty of blame to go around, and SV should have their share of it.
13
@Ben
Boston, MA
Ben, I'm as much of a skeptic about this particular case as you are but it's part of the price you pay for enjoying the benefits a fairly open economic system. On Wall Street at any one time there are all manner of frauds, swindles, defalcations and hustles taking place (what J. K. Galbraith called the Bezzle) and they usually get uncovered during financial crashes. The problem is the alternatives of command and control economic/financial systems, or the acute financial repression that often accompanies authoritarian or feckless political regimes, have their own frauds and none of the upsides of the open market alternative. Nor do you seem to grasp the element of risk taking (aka gambling) that is part of the VC business model. It may offend your Baptist ideas of how investing should happen but in fact it's an inescapable part of the process.
Boston, MA
Ben, I'm as much of a skeptic about this particular case as you are but it's part of the price you pay for enjoying the benefits a fairly open economic system. On Wall Street at any one time there are all manner of frauds, swindles, defalcations and hustles taking place (what J. K. Galbraith called the Bezzle) and they usually get uncovered during financial crashes. The problem is the alternatives of command and control economic/financial systems, or the acute financial repression that often accompanies authoritarian or feckless political regimes, have their own frauds and none of the upsides of the open market alternative. Nor do you seem to grasp the element of risk taking (aka gambling) that is part of the VC business model. It may offend your Baptist ideas of how investing should happen but in fact it's an inescapable part of the process.
3
Oh, I understand the nature of risk involved and that nobody is a perfect predictor. I think that is all normal and expected. Hey, if the author just said that, I'd be very on board.
The problem is that the article seems to be making the OPPOSITE case: good Silicon Valley VC investors ARE infallible and consistently make good predictions, and they saw this as a scam. Only the pretenders screwed it up.
It's a No True Scotsman argument; a REAL Silicon Valley Venture Capitalist would see this for the sham it is, anyone who didn't isn't ACTUALLY part of the scene.
Look at the distinction he makes between "Silicon Valley Proper" (the ones who got Theranos right) and everyone else. That is like, textbook fallacy right there.
My original point was, even if this fallacious argument is true, why does "silicon valley" get a pass on that basis?
Lets assume the author's position is correct. It means the vast, VAST majority of the people in the sector, 90% or more, are making the same poor, irrational choices that the tech world scoffs at.
If that is the case, and the problem is so widespread, it seems to me that is the RULE for the sector, and not the exception.
The problem is that the article seems to be making the OPPOSITE case: good Silicon Valley VC investors ARE infallible and consistently make good predictions, and they saw this as a scam. Only the pretenders screwed it up.
It's a No True Scotsman argument; a REAL Silicon Valley Venture Capitalist would see this for the sham it is, anyone who didn't isn't ACTUALLY part of the scene.
Look at the distinction he makes between "Silicon Valley Proper" (the ones who got Theranos right) and everyone else. That is like, textbook fallacy right there.
My original point was, even if this fallacious argument is true, why does "silicon valley" get a pass on that basis?
Lets assume the author's position is correct. It means the vast, VAST majority of the people in the sector, 90% or more, are making the same poor, irrational choices that the tech world scoffs at.
If that is the case, and the problem is so widespread, it seems to me that is the RULE for the sector, and not the exception.
2
In contrary it's 100% Silicon Valley. The so called fringe investors and companies are also part of the valley. The so called top investors also make many many lousy bets. when theranos was hype, everyone was all applause and racing to write about her. Now everyone is competing to write about how they saw this coming!
I would have given credit to the op-ed if it was written/published when Theranos was still hype and SV's darling not now!
I would have given credit to the op-ed if it was written/published when Theranos was still hype and SV's darling not now!
23
I remember clearly when Ms. Holmes was all over the media. The billionaire college dropout! The female Bill Gates! Girl power!
My oldest daughter was applying to colleges at the time, and began pointing to Holmes as an example of why she really didn't need to continue her education. "HER parents just gave her her college fund," she noted. Yes. Well, as the kids say, "whatever." Needless to say, I put my foot down. Firmly. And so did her dad. But we know that we were lucky. At eighteen, she could have easily decided not to go to college, and we wouldn't have been able to force her.
I wish the media would think twice before offering up every "disruptor" as a potential It Girl. It's exhausting to continually have to explain why every Holmes, Kardashian, and Beyonce is not necessarily a fitting role model. I know it's part of my job as a mother, but damn, it's tiresome!
As for my daughter, it was she who texted me the link to this story. " Go ahead and say it," she wrote. I won't, but I'm certainly glad that she was listening.
My oldest daughter was applying to colleges at the time, and began pointing to Holmes as an example of why she really didn't need to continue her education. "HER parents just gave her her college fund," she noted. Yes. Well, as the kids say, "whatever." Needless to say, I put my foot down. Firmly. And so did her dad. But we know that we were lucky. At eighteen, she could have easily decided not to go to college, and we wouldn't have been able to force her.
I wish the media would think twice before offering up every "disruptor" as a potential It Girl. It's exhausting to continually have to explain why every Holmes, Kardashian, and Beyonce is not necessarily a fitting role model. I know it's part of my job as a mother, but damn, it's tiresome!
As for my daughter, it was she who texted me the link to this story. " Go ahead and say it," she wrote. I won't, but I'm certainly glad that she was listening.
345
"I wish the media would think twice before offering up every "disruptor" as a potential It Girl."
The Media is susceptible to being played for suckers by PR hacks. More susceptible than regular schmoes watching ads on TV, even, it turns out!
The Media is susceptible to being played for suckers by PR hacks. More susceptible than regular schmoes watching ads on TV, even, it turns out!
The New York Times was praising this woman as the next paragon of human decency and much more. They were falling all over themselves, honoring her as breaking down barriers, paving the way, standing up to lawmakers, and 'running one of the world’s most successful start-ups'.
Don’t Blame Silicon Valley for Theranos? how about blame LAURA ARRILLAGA-ANDREESSEN from the NYT, who just in October introduced us to the best human being and company that ever lived.
Time to eat crown NYT, you owe us all an apology for this article, written with 0 investigation on your part, which no doubt influenced people to invest their coin on this enterprise under criminal investigation: http://nyti.ms/1Qlr19y
Don’t Blame Silicon Valley for Theranos? how about blame LAURA ARRILLAGA-ANDREESSEN from the NYT, who just in October introduced us to the best human being and company that ever lived.
Time to eat crown NYT, you owe us all an apology for this article, written with 0 investigation on your part, which no doubt influenced people to invest their coin on this enterprise under criminal investigation: http://nyti.ms/1Qlr19y
129
Great comment! Thanks for including the link.
3
Thank you for the link. As a physician and Stanford alumna, I'm disappointed that Holmes dropped out, disappointed that The New Yorker and Laura Arrillaga-Andreessen touted this work to the general public when Theranos wouldn't discuss its proprietary techniques, and disappointed that some readers jump to how a young and bright woman got less scrutiny than a young and bright man may have. I don't know if that's true, but I think Holmes's faculty advisors should have seen this coming.
16
Now I'd like to also see some investigation done on Laura Arrillaga-Andreessen. What exactly is happening with all the money she's been collecting for her philanthropic causes?
Has she been off the mark with more than just Theranos?
Has she been off the mark with more than just Theranos?
1
When I read in the New Yorker magazine that former Senator Bill Frist, who used to diagnose Terry Schiavo's problems by looking at You Tube videos, or some such sloppy method, was tapped to be on the board of Theranos, I knew right then that this had to be some sort of scam. Pretty much the entire board was made up of people with connections to the Republican Party; Bill Frist was the worst of a bad lot--which is saying a great deal when Henry Kissinger is in the mix.
251
Bill Frist was already a full member of Theranos board, alongside other former politicians Sam Nunn, Schultz, Bill Perry, Kissinger and retired military heads like Gary Roughead and James Mathis.
1
This op-ed might have been intended to distinguish the "real" Silicon Valley VC community from the allegedly "motley" bunch that funded Theranos, but it just ends up making the author seem defensive and thin-skinned. Are you really scared that entrepreneurs in need of money won't come seeking your assistance in the future because of Theranos? How much money and public adulation does it take to fill that empty space inside?
7
the entire process, from venture fundraising to recruitment of board members and company 'scientists' to responses to FDA investigators, reflects sociopathic paranoid behavior on the part of the CEO.
Further, there is an obvious intent to copy, parasitize efforts from a European company that had begun to implement the same or similar 'nano' ideas'.
(nanodrop technology). Why recruit the family friends and contacts when there are so many wonderful competent nanoscientists, and the like?
Theranos should be shut down for the above and for the safety of prospective patients or clients. Return the venture capiital money or what is left of it!!
Further, there is an obvious intent to copy, parasitize efforts from a European company that had begun to implement the same or similar 'nano' ideas'.
(nanodrop technology). Why recruit the family friends and contacts when there are so many wonderful competent nanoscientists, and the like?
Theranos should be shut down for the above and for the safety of prospective patients or clients. Return the venture capiital money or what is left of it!!
5
This article panders so blatantly we'll call it an infomercial for SV. The bay area is filled with self-important know-nothings convinced of their own mastery. 'Visionary' is a term bandied about the way green stamps were in the 70s. "Don't judge a book by its cover" has become "Only judge a book by its cover." They all seem to take their cue from a greasy, bow-tied used car salesman who managed to convince the world to overpay for a little gray doorstop in 1984, and then repeated his feat 25 years later with digi-walkmen and phones ($ 500? really?) That he dragged whole teams of people through half a dozen titanic-scale failures in between escapes notice. Here is the house that Steve built.
8
Yes, Silicon Valley actually consists of two very separate places. One is the engineering community, and the other is the "finance/media complex". They are often at odds with each other, even within the same company.
We saw that play out with HP. A solid, engineering led, company succumbs to the bean counters and starts to flail. The new Social Media Unicorns are more pure business ideas than real Tech, as an engineer would understand it.
The life or death "Pitching to the VC" is a media created mythology of Silicon Valley. What really happens is the VC sends the candidate company out to pitch to the engineering groups at several companies for vetting. If there is a whiff of smoke and mirrors, to the people that can actually build the product, the word goes back to the VC. It's a pro bono arrangement; that only the top VC firms get.
We saw that play out with HP. A solid, engineering led, company succumbs to the bean counters and starts to flail. The new Social Media Unicorns are more pure business ideas than real Tech, as an engineer would understand it.
The life or death "Pitching to the VC" is a media created mythology of Silicon Valley. What really happens is the VC sends the candidate company out to pitch to the engineering groups at several companies for vetting. If there is a whiff of smoke and mirrors, to the people that can actually build the product, the word goes back to the VC. It's a pro bono arrangement; that only the top VC firms get.
4
Elizabeth Holmes' goal of vastly reducing the difficulty, expense and pain of lab blood tests remains a noble one, and while she has been over-eager, I don't believe she is a cynical con artist. Entrepreneurs and researchers often believe they're closer to achieving their ideals than in fact they are, and issue forecasts of what they'll be able to do and when which later appear over-optimistic. Let's remember that "under investigation" is not tantamount to "found guilty."
40
She doesn't necessarily need to be a con artist to be found liable for securities fraud. She simply needs to have omitted or misstated material facts in offering and selling securities to her investors.
3
I believe her goal was much more simple. Make money.
That's all Silicon Valley is about as that is it's only measurement of success. The only thing that is ever discussed, how much money an individual makes. Nothing else.
That's all Silicon Valley is about as that is it's only measurement of success. The only thing that is ever discussed, how much money an individual makes. Nothing else.
1
Walgreens isn't the first company not to do its due diligence. There are plenty of others out there that don't and pay the price. In the case of Theranos, the tip off was her not completing college or earning an advanced degree. Science is not something that you just "do". It involves observing, learning, making mistakes, etc. What it sounds like is this: Walgreens wanted something to make them stand out in the crowd and made the wrong choice.
9
In Chinese there is a saying "to throw stones down a well after someone has fallen in." Perhaps our closest equivalent in English is "kicking someone when they're down." It certainly is clear that problems have cropped up with Theranos, and it appears now everyone wants to distance themselves from the problem. However, it is hard to believe there was never anything there to begin with. Was it all just a figment of Elizabeth Holmes' imagination, and she was really such an outstanding sales person that no one ever tried to verify the results? I doubt it. While her technique of multiple test results using just a finger prick worth of blood instead of a whole vial is unique, the expected outcomes should be the same. A blood glucose level of xx or a cholesterol level of xx should be identical, whatever method you use to arrive at it. Lack of peer-reviewed research aside, are we to believe no one ever try to measure up the results of a Theranos test with a conventional blood test? I doubt it. Is there any possibility this could be a case of heavy-handed regulators who want to preserve the status quo of traditional lab testing, which is an enormously profitable business? I don't have any way to judge for sure, but there is no question that Theranos is a disruptive enough technology to worry a lot of people. Regardless of what is at the bottom of all of this, If we vilify people who try to innovate when they stumble, I don't think it bodes well for the future of innovation.
4
Thank you JHM for pointing out what seems to be the actual issue here. Theranos' competitors are highly influential and are most likely to suffer if/when these new technologies succeed. And why the very loud and public FDA storm when they gave Theranos an equally public approval of their technologies only 9 months ago? Does politics influence heathcare? Have we learned nothing from the specious castigation of Obamacare, which has impressively increased the number of insured Americans?
Jumping on the the anti-progress bandwagon seems pretty suspicious coming from "The Valley," don't you think?
Jumping on the the anti-progress bandwagon seems pretty suspicious coming from "The Valley," don't you think?
Theranos is beginning to feel like the next evolution of the subprime bubble: a once-great investment opportunity that in hindsight had a mile of warning signs. And like the subprime bubble, there may have been many middle men that knew as much but saw opportunity in pumping up the value and passing it on to unwitting investors.
4
The most troubling thing about Silicon Valley is the mentality that 9 out of 10 companies will not make it! This creates irresponsible business practice. Money is easy to come by and failure does not have any major consequence. The same kind of business model and the same group of people just move from one to the next till they hit jackpot. It Is other people's money to burn anyway!
2
It's interesting how members of the VIP Board of Directors quietly left in lifeboats after the Oct. 2015 signal flair was lit. George Schultz and Henry Kissinger are the illuminati of Life Sciences ? Theranos topic initiated a sidebar conversation at Stanford TEDx this past Sunday. If the deck is face card up ?
6
One potential investor turned Theranos down because of too much "hand waving". I believe the term "hand waving" is an expression fairly unique to the scientific community. It refers to explanations that are supported by gesticulations as the speaker tries to explain what they mean rather than rigorous mathematical arguments or experimental data. It sounds like the story of Theranos can be summed up as: those who had scientists on their board or who thought like scientists saw right through the sham.
63
List of investors in Theranos described in article is very short. Are these the only individuals/ firms to put money in?
3
This article is more an exercise in image protection on behalf of "silicon valley vc firms" than a thoughtful evaluation of Theranos's vc investors. The points raised are legitimate and I don't doubt that there's a real story in there somewhere. But overall the article does not say much more than "See, those people who invested in Theranos, they're not really members of the club. The real members of the club are too smart to do that." It's closer to p.r. than to journalism.
46
The writer seems to miss some key elements to the story. Theranos is pursuing technology that makes blood diagnostics quicker and less expensive. Traditional v.c. almost never funds a concept that makes a product or service 'less expensive and more accessible'; they seek expensive, exclusive, and highly proprietary. Second, Ms Holmes intends to keep the company private and the capital structure of Theranos reflects this. That leaves traditional v.c. with fewer options to monetize their investment ... and they are uncomfortable with the concept of 'fewer'. Third, Ms Holmes may not be PhD'd or MD'd but her senior staff is. That appears to count for nothing with writer Stross. As the science department at the FDA is pretty much a revolving door with traditional v.c., it is not surprising to me that this upstart outsider is having a tough go of it with compliance and study structure. I suspect Theranos will figure this out in short order. This whole episode is strikingly similar to the struggles face by ImClone a few years back, and that turned out pretty good for owners and investors, except one.
5
Most of the clinical laboratory medical specialist (MD clinical pathologists and PhD clinical chemists) community didnt believe anything Theranos was stating from the outset as well but we were ignored because of all the silicon valley hype associated with Elizabeth Holmes, her star studded non medical board of directors and the steve jobs-like black turtle necks that she likes to wear. Her claims made no sense to the scientific community; to me, it was as if someone told you that had tablet computer with 30Gb of memory with ultra processing power in 1980 but was unwilling to ever show it in public; you just had to believe them
David Alter MD DABCC
David Alter MD DABCC
40
Refreshing to read this! I remember reading patents and patent applications from Holmes and Theranos while doing freedom-to-operate research at my previous company and thinking to myself, "Hmm, there is no there there". So I was amazed when they raised money--for what?--but not at all surprised by the subsequent collapse. The physical world is unfortunately bound by physical laws, the same ones constraining technology for hundreds of years. You can't just wish them away, or throw money at them (and produce a product that performs at a price someone will pay). Too bad Holmes didn't realize that.
29
This article lacks a fundamental insight behind how VC based companies succeed. Fact of the matter is that the reason the top VC backed companies succeed is not due to their outstanding science or the Ph.D's of the investors but more to their connections in making deals that allow for a longer runway. For every one MPM backed company, I can assure you there are at least 3-4 others with similar technology that simply don't have the 'right' people behind them and thus don't get the visibility. VC's mostly fund people they know. Science matters, yes but connections are vital if you want to survive long enough for your technology to take hold. The success or now, lack thereof of Theranos shows how balancing the two is important.
11
The reason that the major VC firms didn't make their due diligence available or public: NON-DISCLOSURE AGREEMENTS. No one "opens the kimono" on the details of their business plan to an investor or investment firm without an NDA.
3
Standard practice for VC firms is not to sign NDAs with prospective portfolio companies.
8
Richard - what you say seems reasonable, but in fact it couldn't be further from the truth. I've been in many VC pitches - on both sides of the table - and there was _never_ an NDA. VCs don't sign NDAs. You take your chances, and hope that they don't suggest your plan to the next company that comes in the door. Sadly, sometimes they do.
3
anyone with half a brain and a little sense could see this fraud coming a mile away.
12
Except the NYT, who wrote this love letter about it in October:
http://nyti.ms/1Qlr19y
According to LAURA ARRILLAGA-ANDREESSEN, this lady was breaking down barriers, paving the way, standing up to lawmakers, and 'running one of the world’s most successful start-ups'.
http://nyti.ms/1Qlr19y
According to LAURA ARRILLAGA-ANDREESSEN, this lady was breaking down barriers, paving the way, standing up to lawmakers, and 'running one of the world’s most successful start-ups'.
11
As a patient advocate looking at these startups from the end-user perspective, I have to disagree. Our patient communities get bombarded with requests to 'crowd-source' or 'share data' from companies all the time. Without fail, the companies skirting regulatory requirements (no IRB, collecting bio samples without informed consent, etc) come from the Bay Area. Boston is also an incubator environment, but there at least seems to be some awareness of how the industry works.
When you are in a culture where you are taught to believe that every widget, idea or technology produced 'disruptive,' world-changing and revolutionary, it's not so hard to understand why old-fashioned ideas like federal regulations to protect human subjects of research seem out-dated. But developing an app to replace taxis is a lot different than testing blood for serious diseases or diagnosing complex genetic disorders through crowd-sourcing DNA samples.
It would be different if Bay Area innovators just didn't understand the differences and were willing to learn. But as we saw with 23andMe and Theranos, not only are they not interested in complying with laws designed to protect people, they are arrogant about flouting those laws and waste a lot of taxpayer time and money playing games with regulators.
When you are in a culture where you are taught to believe that every widget, idea or technology produced 'disruptive,' world-changing and revolutionary, it's not so hard to understand why old-fashioned ideas like federal regulations to protect human subjects of research seem out-dated. But developing an app to replace taxis is a lot different than testing blood for serious diseases or diagnosing complex genetic disorders through crowd-sourcing DNA samples.
It would be different if Bay Area innovators just didn't understand the differences and were willing to learn. But as we saw with 23andMe and Theranos, not only are they not interested in complying with laws designed to protect people, they are arrogant about flouting those laws and waste a lot of taxpayer time and money playing games with regulators.
57
Analytical devices that provide CLIA-certified laboratory assays on small blood samples have been commercially available for 20+ years. I never understood why Theranos was "revolutionary". The laboratory I worked for in 1994 began making similar devices available for Point-of-Care testing by the nursing and emergency room staff. The devices work very well - but had to be maintained and verified by the laboratory staff to ensure accuracy and precision. A consistent schedule of calibration, verification, and control testing (as described in detail by CLIA) is second nature to anyone working in the clinical lab. Perhaps Theranos needed to hire more Med Techs? Or maybe they tried, and the candidates all said, "why don't you just use the i-STAT?".
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Keith-
I agree with you completely. The "glow" of Theranos has been a total mystery to me. I have been following the saga and am surprised it took this long for it to crash.
MS, MT(ASCP) since 1970, specialist/consultant in point of care testing.
I agree with you completely. The "glow" of Theranos has been a total mystery to me. I have been following the saga and am surprised it took this long for it to crash.
MS, MT(ASCP) since 1970, specialist/consultant in point of care testing.
2
Thank you for commenting! None of the technologists and pathologists I spoke with about Theranos in its early days were eager to try testing through Walgreens, especially since Theranos wouldn't discuss its proprietary techniques (fluidics). One of Holmes's motivating factors was a fear of needlesticks, as described in a glowing New Yorker article a year or so ago. She turned into a media darling, and I'm disappointed that her board and her personal advisors seem to be standing back and letting her take the fall for this.
I never understood the tech funding model of financing 20 start-ups to get one break-out. Why not finance 20 solid ideas and get them all to succeed? Who needs another app selling pre-packed overpriced mediocre cook-it-yourself dinners delivered daily....?
28
No one finances a bad idea. The problem is that not all good ideas achieve the same degree of success or are able to achieve the same degree of success, but this usually cannot be known during the vetting process. It becomes apparent only after giving it a try.
If it was so simple, everyone would be a VC and clean up. The challenge is in identifying "solid ideas". The cruel math of VC is that the break-outs drive nearly all the return from venture capital. Funding a flub doesn't hurt as much as missing the next Google or Facebook.
29
If it is that easy to finance 20 new and interesting start ups and get all of them to succeed, may I politely suggest that you try it?
What William Goldman wrote about Hollywood applies equally well to groundbreaking tech companies: "Nobody knows anything...... Not one person in the entire motion picture field knows for a certainty what's going to work. Every time out it's a guess and, if you're lucky, an educated one."
What William Goldman wrote about Hollywood applies equally well to groundbreaking tech companies: "Nobody knows anything...... Not one person in the entire motion picture field knows for a certainty what's going to work. Every time out it's a guess and, if you're lucky, an educated one."
5
Baloney. All these companies network and swap employees. If all these PhD loaded VC firms thought Theranos was a dud why has it taken 10 years for the word to get out. They all throw eggs at the wall in the hope some will stick. It's inevitable given the area they operate in. Some maybe better pickers than others but to claim there was some superior wisdom about Theranos residing in a handful of VC's and this would not have surfaced long ago is bunk.
63
Companies are free to form and make their claims. If some fool invests so be it. There is no traffic cop patrolling early phase companies to weed out the crazy or the unscrupulous. There is only the free market and it acts in its own time. Like now. That's why it takes years in some cases.
2
@Denis Pombriant
Boston
Ten years to discover that the technology that is the basis of the business model of Theranos and that $9 billion valuation doesn't work? You're missing the point. The author of this piece is attempting to give "the better class" of Silicon valley VC firms a pass on the charge of pumping and dumping start ups with questionable technologies. In fact this is very much the culture among all these VC's. They all do it. They are notorious for it. The claim that a few "superior" firms had suspicions or knew all along is not plausible.
Boston
Ten years to discover that the technology that is the basis of the business model of Theranos and that $9 billion valuation doesn't work? You're missing the point. The author of this piece is attempting to give "the better class" of Silicon valley VC firms a pass on the charge of pumping and dumping start ups with questionable technologies. In fact this is very much the culture among all these VC's. They all do it. They are notorious for it. The claim that a few "superior" firms had suspicions or knew all along is not plausible.
10
The smarter VC firms are not 100% in predicting which eggs will stick to the wall, but they do pick those eggs which are likelier to stick.
There seemed to be a lot of warnings along the way ( Kissinger on the Board? !?)
Now if the Times could get some brilliant Si Valleyan to explain to common sense-limited folks like me how Amazon's model works - how a behemoth can devour the world of retail without making a profit, I will be all set.
Now if the Times could get some brilliant Si Valleyan to explain to common sense-limited folks like me how Amazon's model works - how a behemoth can devour the world of retail without making a profit, I will be all set.
43
If you created a company that provided a service people loved and it generated positive cash flow for you, it would enable you to invest and grow that business. If an accountant told you you weren't making a profit by their definition, you'd probably not be too concerned as long as your business kept generating healthy cash flow. That's Amazon, Salesforce.com and lots of other web businesses. New world.
10
Hi Cheryl! It's pretty simple actually: Amazon could make a profit if they wanted to, but instead take their profits and reinvest it into the business because they see the possibility of more growth. Once they don't see anywhere else to grow they will take their profits and instead of reinvesting into R&D, more warehouses and datacenters, and that sort of stuff, they will take that money and distribute it as a dividend to shareholders.
@Cheryl wants someone from Silicon Valley to explain how amazon.com can devour the world of retail without making a profit.
I live in The Valley. It's easy, and is SOP around here: Amazon may lose money on each transaction, but they make up for it in volume!!!
Umm. Wait.
I know.
The emperor really does have a lovely new set of clothes.
I live in The Valley. It's easy, and is SOP around here: Amazon may lose money on each transaction, but they make up for it in volume!!!
Umm. Wait.
I know.
The emperor really does have a lovely new set of clothes.
The media needed a female version of Zuckerberg, and they got one. She's blonde! She wears a black turtleneck! She's a dropout from Stanford! Ergo, she must be a genius.
194
Just read the second to last paragraph
11
Not Silicon Valley's fault, just the media that went all out to promote this lady and her company as the next best thing since ever.
2
If it sounds too good to be true, just ask for the data.
55
College drop out that only wears black turtlenecks. Just like Steve Jobs!
And people bought into it to the tune of 9 Billion. Amazing.
The only thing Theranos is going to produce of value is several tell-all books and a movie starring Amy Schumer.
And people bought into it to the tune of 9 Billion. Amazing.
The only thing Theranos is going to produce of value is several tell-all books and a movie starring Amy Schumer.
128
What happened to the regulatory systems that review the accuracy and proficiency of clinical laboratories?
9
Excellent question. I've spent my career as a life sciences executive. US lab companies are theoretically regulated but in practice each facility can vary substantially in their adherence to proper testing protocols. It's not at all unusual for two different labs to provide results on the same samples that are sufficiently different to lead physicians towards different conclusions and therefore different choice of treatment.
Anything you see on your lab results you'd better off taking with a grain of salt and if the purpose of the test is of particular importance repeat with a different lab. Of course that's practically impossible for people who are unable to pay out of pocket.
That's what private enterprise and entrepreneurship do in healthcare unfortunately.
Anything you see on your lab results you'd better off taking with a grain of salt and if the purpose of the test is of particular importance repeat with a different lab. Of course that's practically impossible for people who are unable to pay out of pocket.
That's what private enterprise and entrepreneurship do in healthcare unfortunately.
3
@Ange
Thanks for that insight.
As you said, most of the time, we can't do anything about it but definitely good to be aware of.
Thanks for that insight.
As you said, most of the time, we can't do anything about it but definitely good to be aware of.
They are still there, which is why Theranos now has a really big problem on their hands.
Very informative. Amazing that the fact that the major qualification of Holmes was that she did playdates with Drapers kid. That happy coincidence seems to be the genesis of this thing. You can't make this stuff up.
77
Last year, I was writing a research paper on the controversies over disruptive innovation, and happened to listen to a podcast interview with Michael Raynor, one of Chris Christensen’s co-authors and a prominent advocate of the theory. After explaining why Uber didn’t fit into the standard model of disruption, he was asked which new companies might. He hemmed and hawed a bit, admitted he didn’t know all the details, and suggested Theranos.
Raynor’s a very sharp guy, but it reminded me, yet again, of just how powerful bandwagons and hype remain in the business world.
Business hagiography has an awful track record, and especially when leaders glorified for their brilliance step out of their lanes and claim meaningful expertise in a very different arena, to wit: how to run the world (Andreessen, Fiorina, et al).
Raynor’s a very sharp guy, but it reminded me, yet again, of just how powerful bandwagons and hype remain in the business world.
Business hagiography has an awful track record, and especially when leaders glorified for their brilliance step out of their lanes and claim meaningful expertise in a very different arena, to wit: how to run the world (Andreessen, Fiorina, et al).
107
Not enough to separate the whole culture into 2 groups of people. The fact is, Ms. Holmes looked and played the part and some people holding the purse strings fell for it/her hook, line and sinker.
21
Nine billion dollar valuation for Theranos: fanciful and wholly unsupportable, solely serving the narrow interests of silicon valley venture capitalists, and turning a fraudulent schemer into a paper billionaire
19
That's interesting that even though the more experienced investors turned her down, the media propped her up. The whole business plan sounds like a one shot pony, which would be great if it actually worked, but appears to be more dream than reality. A lot has been said about the black turtleneck, an amazing idea, and an entrepreneur path of dropping out of a prestigious school. Sounds like a formula to copy from many of the tech greats, but doesn't guarantee success. For every Steve Jobs ,there's many more Barry Minkows, who was just a younger version of Bernie Madoff with a real business Ponzi scheme. The fact that the directors are all political figures with no knowledge of the medical field kinda shows that this might be a company that's all talk but no substance. Not much different than most politics or religion. The book of Proverbs states that a wise person will see a calamity in the distance and avoid it. Sounds like a few people observed the same thing with Theranos.
52
The Supervoting share ratio of 100:1 eclipses the vice or voice of reason, another proverb ?
This is simply a scold for not taking it slow (publishing in peer reviewed journals--nothing could be more conservative) and for taking chances with a technology in health related activity. It may be a proper scold, but like all scolding, it involves an element of self-righteousness and perhaps hidden motive. It's not great reporting.
11
One cheer for the conservatism of venture capitalists in Silicon Valley. VCs are much better at playing a "heads I win, tails you lose (and I win)" game. If they knew it was a sham, then why didn't they say anythin? (The articles doesn't even claim that it was a sham, only that Silicon Valley is too conservative to take the plunge; which we know.) Marianna Mazzacuto documents, in The Entrepeneurial State, the myriad ways that VC just specializes in monetizing risks taken by everyone else (especially the public sector), while claiming the credit for their risk-taking. How bankers have managed to convince everyone that they deserve the lion's share of rewards is nuts.
21
"...venture capitalists in Silicon Valley. VCs are much better at playing a "heads I win, tails you lose (and I win)" game. If they knew it was a sham, then why didn't they say anythin?"
Why should they? It's not their job to do other people's homework for them. (And, arguably, their failure to invest in the company spoke volumes to those able to hear it.)
Why should they? It's not their job to do other people's homework for them. (And, arguably, their failure to invest in the company spoke volumes to those able to hear it.)
5
It's not just impressively credentialed partners at big life-science Silicon Valley VC firms who saw Ms Holmes as a con-artist. My brother and I have been developing and launching simple consumer products from our 3-person San Fernando Valley company for the past 25 years. We pegged her as bogus at the outset. The reality of all new product development is messy and Ms. Holmes' story was simply too media perfect.
But it's not all her fault. Just as with the NYC Real Estate Guy, the media enabled the con so they could profit from the hype.
But it's not all her fault. Just as with the NYC Real Estate Guy, the media enabled the con so they could profit from the hype.
89
A new vehicle with a shiny polish that won't start and the latch to open the hood is safety wired shut.
1
When the average person "blames Silicon Valley" what's meant is that blame should fall on a general business culture that has disavowed reliance on age-old fundamentals, like revenues and profits, in favor of reliance on the likelihood of "disruption" or, in the case of online companies, the number of users. The tech industry has encouraged this unfortunate trend. No doubt there are savvy life sciences investors who saw red flags at Theranos but, overall, Silicon Valley has fostered the atmosphere which allowed Theranos to sell its services to Walgreens based on little more than expectations, venture capital backing and slick marketing.
210
The $350 million Safeway spents retrofitting it's stores for Theranos blood tests gather dust like T -Rex fossils.
3
This would be worthy of an April fool's article!
Everyone in Silicon Valley is a genius.....until they are not!
Falling for the shiny new "it thing" is a race, after all we all need a shiny new "it thing"
Everyone in Silicon Valley is a genius.....until they are not!
Falling for the shiny new "it thing" is a race, after all we all need a shiny new "it thing"
18
If there are two groups of players in Silicon Valley, and the second one is responsible for Theranos, then it is that Silicon Valley's fault. That Silicon Valley is composed largely of schemers and scammers and investors looking for something about to take off and entrepreneurs looking for an idea that will attract a bankroll -- a few genuine ideas among many false appearances of genuine ideas. It is largely a waste of resources, a game that the rest of us pay for but that gives us few benefits.
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